The Kansas Supreme Court heard from the state and from the plaintiffs in the equity portion of the Gannon School Finance lawsuit today. The hearing took about 2 ½ hours.

Attorneys for the state were questioned first. They defended the block grant funding scheme passed by the legislature (SB 7) and asserted that the money the legislature had appropriated for the equity resolution last year was appropriate to meet the requirement.

The money that had been appropriated was about $138 million but the final cost was closer to $200 million. The state argued that the money appropriated was based on what they were told by the State Department of Education. KSDE had provided an estimate of the amount that would be needed based on the prior year’s data – the only data available at that time.

Attorneys for the plaintiffs maintained that it was long past time to resolve the issue and that the repeal of a constitutionally sound but underfunded school finance formula was an inappropriate action by the legislature.

Questioning of both sides by the justices was pointed but it was difficult to tell with any certainty what position they might be forming.

We don’t know when they will make their ruling but most expect it to come early in the session.

The issue of adequacy is still to be resolved.

Special Tax Committee considers sales tax exemptions, tax credits

A special Joint Committee on Taxation spent the last two days learning about the challenges of sales tax policy and tax credits.

The committee studied the history of the sales tax in Kansas and reviewed Legislative Post Audit studies that have been conducted on sales tax exemptions, tax credits, and economic development incentives.

They took public testimony today. Shawnee Mission Superintendent Jim Hinson gave them much food for thought regarding Tax Increment Financing Districts (TIFs) which have the potential to stress the budgets of school districts – particularly growing districts like Shawnee Mission.

KNEA lobbyist Mark Desetti testified, urging the committee to reign in the granting of sales tax exemptions by developing guidelines under which an organization would be eligible for such an exemption. Today these exemptions are generally granted every time an organization comes before the committee with a pitch leading to an enormous laundry list of individually named organizations with exemptions.

A coalition of non-profit organizations urged the committee to proceed cautiously while the Sisters of Charity made a plea for the preservation of the Earned Income Tax Credit which applies to the lowest income Kansans.

The Kansas Livestock Association and Farm Bureau both spoke on behalf of rural and agricultural interests in the state.

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It’s another quiet day under the dome. We are in a holding pattern while legislators grapple with the every-increasing budget hole they have to fill.

While there have been some proposals to raise revenue, there hasn’t yet been enough done to overcome the drops experienced thanks to Governor Brownback’s reckless income tax cuts of 2012 and 2013.

Talk continues about changing the income tax cuts given to LLC’s under which 330,000 Kansas businesses have been allowed to pay no income tax at all. There is a proposal to limit this provision to those businesses that hire people. This has the potential to close about half of the hole in this year’s budget.

Other proposals focus on “consumption taxes” including one proposal to raise the state sales tax from the current 6.15% to 6.5%. The governor has suggested raising taxes on tobacco and liquor and instituting a tax amnesty program for those who owe back taxes, letting them pay without penalty.

So far though, the biggest push-back to these proposals has come from those who backed the anti-tax conservatives in their elections. Americans for Prosperity, the Kansas Chamber of Commerce, the Kansas Policy Institute, and the National Federation of Independent Businesses have been vocal opponents to any tax increases.

The situation in Kansas continues to make national headlines. Most recently a Washington Post editorial has been appearing in newspapers around the nation. Calling Kansas an “instructive educational mess,” the editorial focuses on the damage being done to public education citing it as a reason to be wary of proposals to go down the same path as our state. We’ve found it so far in North Carolina and Illinois newspapers. Read it by clicking here.

KPERS “spiking” bill has hearing

HB 2426, a bill that would limit accumulated leave for KPERS covered employees, had a hearing today in the House Commerce Committee.

At issue is what some legislators refer to as “spiking” for the purposes of increasing the retirement benefit. They allege it happens when employees accumulate large amounts of leave time which is paid to them upon retirement thus raising the final average salary for the calculation of benefits. By limiting the amount of accumulated leave, legislators would limit the chances that this could happen.

Limiting leave accumulation however creates other unintended consequences such as leaving employees without sufficient sick leave should they experience a significant health issue.

Testifying in favor of the bill were Rep. Jerry Lunn (R-Overland Park), Dave Trabert of the Kansas Policy Institute, and the Kansas Chamber of Commerce. There were numerous opponents.

Perhaps realizing the potential negative impacts of the bill – unintended or not – Chairman Mark Hutton (R-Wichita) announced at the end of meeting that he would not be working the bill this session and instead would ask for an interim study of the issue.